The Republicans' "Contract With America" proposed to drastically alter the U.S. legal system to curtail a flood of "frivolous lawsuits and outlandish damage rewards [that] make a mockery of our civil justice system."
What "frivolous lawsuit" problem is the Contract talking about? Rep. Michael Oxley (R-Ohio), Chairman of the House Energy and Commerce Committee, provided a clue (KPFK, 2/22/95): "Whenever the public reads about a woman who spills coffee in her lap and gets $3 million, most people say this doesn't make a whole lot of sense."
You've probably heard about this case. From Jay Leno to your local radio talk show, the "outrage" over a $2.9 million jury award for spilled coffee has become a cause celebre for legal reform.
Rep. Oxley is referring to the case of Stella Liebeck, the New Mexico grandmother who ordered coffee from a McDonald's drive-thru window. In the parking lot, with her grandson behind the wheel of the stationary car, Liebeck opened the lid of her coffee to add cream and sugar and inadvertently spilled hot coffee on her lap. The coffee--maintained at a scalding 180F-190F because customers supposedly "like it hot"--caused severe third-degree burns to Liebeck's groin, inner thighs and buttocks. She spent seven days in the hospital and was treated with skin grafts.
Initially, Ms. Liebeck only wanted payment for her medical bills, but McDonald's refused to even negotiate with her. Consequently, she contacted an attorney who had settled another coffee burn case with McDonald's. Liebeck sued, and in the course of trial in August 1994, company documents revealed that "in the past decade McDonald's had received at least 700 reports of coffee burns ranging from mild to third-degree, and had settled claims arising from scalding injuries for more than $500,000," wrote Andrea Gerlin in the Wall Street Journal (9/1/94).
Despite knowledge of the hazard, company officials refused to warn its customers. "There are more serious dangers in restaurants," said one McDonald's official. And given the 1 billion cups of coffee sold annually, McDonald's considered the number of burn complaints to be "statistically insignificant."
After hearing such testimony, the jurors found McDonald's liable and awarded $200,000 in compensatory damages. The jurors deducted $40,000 for contributory negligence on Liebeck's part. Also, given McDonald's conduct, the jury awarded $2.7 million in punitive damages, which was equal to two days' worth of the company's coffee sales.
Later, the punitive damage award was reduced by the judge to $480,000 (Reuters, 9/14/94). While awaiting appeal, the parties settled for an undisclosed amount (Reuters, 12/1/94).
These facts were hardly secret--they were explained in substance, for example, by Ralph Nader in testimony to the House Judiciary Committee (2/13/95)--but pundits and PR flacks have exploited the Liebeck case as an "absurd" example of why reform is necessary to curb frivolous lawsuits. In many cases, their facts are incomplete or just plain wrong.
"A jury," sniffed George Will in Newsweek (12/26/94), "awarded $2.9 million to a woman who burned herself when, in a moving car, leaving a McDonald's with a cup of coffee between her legs, she spilled it. She said the coffee was hot."
"Life," moaned the New York Times (1/3/95) "used to be blissfully simple: the coffee hot, the drinker sitting and sipping. But now everyone's hither and yon, perching take-out coffee in mid-dash. And spilling it. And suing someone."
"America has a victim complex," announced Jeff Pelline in the San Francisco Chronicle (12/29/94), noting "such surreal cases as the woman who recently won a $2.7 million verdict after spilling coffee on her leg in a McDonald's restaurant."
"Doesn't common sense count for anything anymore?" demanded Rick Van Warner in the Nation's Restaurant News (9/12/94). "Is it really McDonald's fault that a customer decided to take the lid off a full, hot cup of coffee while she was behind the wheel of an auto?"
"What we have here is a system which has just gotten completely out of control," complained Paul Huard of the National Association of Manufacturers on CNN (1/3/95). "When a plaintiff can pick up a million or two for spilling hot coffee in her lap, you have to know there's something wrong."
Indeed, what's wrong is poor reporting on the legal reform issue. To this day, news stories routinely and uncritically refer to the "$3 million coffee-spill case," months after all the facts are well-known. Media pundits are promoting far-reaching changes in the U.S. legal system on the basis of half-truths and fables.
Paul Ruiz is a third-year law student at UCLA who has done extensive research on the Contract With America's legal reforms.
Defusing the "Litigation Explosion"
Media coverage of proposed changes to the legal system often refers to a litigation "crisis" or "explosion." A look at the numbers suggest that the explosion is a dud.
The Contract with America's "tort reform" plan is focused on changing the rules in product liability cases. According to Russell Moran of the New York Jury Verdict Reporter, product liability cases (excluding asbestos claims) in federal courts declined by 40 percent from 1985 to 1991. Nor are such cases stacked against corporate defendants: In New York courts, Moran reports, between 1988 and 1994, juries found for the defendant in 62 percent of cases (New York Times, 1/16/95).
And punitive damages, the focus of many media horror stories, are not "out of control." Between 1965 and 1990, there were only 355 product liability cases in which juries awarded punitive damages. In only 35 cases was the award greater than $10 million, and in all but one of these cases the award was sharply reduced by the judge (Tim O'Brian, ABC World News Tonight, 3/9/95).
Since statistics don't provide much backing for the idea that the civil litigation system is being abused by plaintiffs, the argument has been largely waged through anecdotes, often distributed by corporate-backed lobbies with names like the American Tort Reform Association. As with the hot coffee case, these cases often look very different when you get to hear both sides.
USA Today, for example, buttressed an editorial in support of tort reform (3/6/95) with a series of misleading "horror stories"--like "the tricycle manufacturer who settled out of court for $7.5 million rather than risk an even more generous jury award over the color of its trikes."
Why would a tricycle manufacturer be afraid that a jury would penalize it for more than $7.5 million for having the wrong color bike? According to the Association of Trial Lawyers of America, that's not what it was afraid of. The case, Berju v. Hanover House, involved a 20-month-old who was riding a tricycle with a wire basket on the handlebars. When the tricycle tipped over, an exposed prong on the basket penetrated the boy's skull, causing permanent brain damage.
The fact that the color of the tricycle concealed the defect was only one of numerous design flaws cited by the boy's lawyer. The manufacturer and seller settled out of court for $1.9 million, much of which goes to cover medical expenses for the boy, who is permanently disabled. That's not the kind of horror story USA Today intended to include.